Well, it appears the legal crisis that Café Gratitude’s owners claimed was undoing their business didn’t turn out to be such a big deal after all. The Bay Citizen now reports that Matthew and Terces Engelhart have settled out of court with the two former employees who brought complaints against them, and furthermore they won’t be closing all of their Northern California locations as they’d previously — in a bit of a new-agey Chicken-Little moment — threatened to do. Matthew Engelhart says, "Some will close and some will stay open," and furthermore the brand will continue its expansion in Southern California, "where the action is."
Back in November, the Engelharts went on a social-media campaign in reaction to two pending lawsuits related to their employment practices. Long story short, they were likely engaging in a type of tip-pooling and tipping out of managers (part of their philosophy of "sacred commerce") that isn’t legal in California. Also, a former bookkeeper may not have been compensated legally, in a separate suit. The Engelharts claimed that their entire business was threatened by these "aggressive" lawsuits (totaling approximately $200,000), and that they would be closing or selling all of their Northern California locations — their extremely successful Los Angeles location is technically under different ownership within the family.
A lawyer for the plaintiffs, Steven Sommers, isn’t allowed to discuss the terms of the settlements. But he earlier told Grub Street that he didn’t buy any of the Engelharts’ claims of poverty, and that they were likely just seeking an excuse to close under-performing locations (the lawsuits were not for exorbitant sums, all things considered). The Engelharts put out appeals to fans and followers of their various self-help workshops in order to solicit donations to a legal defense fund, and in order to defend themselves in the court of public opinion. They are continuing to seek donations, in fact, and Engelhart now insists, "Just because it’s resolved doesn’t mean we haven’t spent a whole lot of money."
We had suspected throughout the unfolding of this story that there were a lot of emotions at play on the part of the Engelharts, especially judging from Facebook appeals from Terces Engelhart, and that the ultimate business decisions may not be as rash or extreme as they were being made out to be. This is, after all, a business that pretends not to be a business, but rather a community/spiritual organization/non-profit source of nourishment. We find it especially telling now that Matthew is referring to SoCal as "where the action is" — the L.A. location is said to bring in $4 million a year in revenue, and they’ve just announced a new location in Venice. Make no mistake: These folks care about money.
The Engelharts have sounded hurt that their beliefs and/or business practices would ever be questioned, or that they could possibly be considered illegal. In a message posted on January 3, Terces writes, "As we head into the New Year and deal with the impact of mistrusting, I invite everyone to take on healing one relationship where you are no longer trusting as you once did. In this way the collective wound begins to heal for us all."
Café Gratitude’s Legal Woes ‘Resolved’ [Bay Citizen]
Earlier: Venice to Drink The Kool-Aid at Cafe Gratitude, Opening on Rose Ave.
In Ongoing PR War, Café Gratitude Devotees Encouraged to Flood Local Media Inboxes With Testimonials
A New Side of the Café Gratitude Closure Story, and Their Potentially Shady ‘Sacred Commerce’
Café Gratitude to Close All Northern California Locations; Gracias Madre Threatened Too [Updated]